Pro-union NLRB alarms employers

Ask almost any veteran management-side labor attorney about the current National Labor Relations Board (NLRB) and he will make two points: First, the board always shifts from favoring business to favoring unions when control of the White House changes, and second, the current board has made an unusually sharp shift to the left.

“The NLRB has traditionally swung a pendulum back and forth depending on which party is in power, and that’s historical back to the founding of the NLRB,” says Charles Caulkins, a partner at Fisher & Phillips.

That’s because the president appoints the board, with three members from his own party and two from the opposition party. The current board has four members—three Democrats and one Republican—with a vacancy in the fifth position. All three Democratic members have strong union ties, and two were given recess appointments when it appeared they would not be confirmed by the Senate. Subsequent proposed rulemakings and case decisions reflect that pro-union tilt.

“The unions claim that previous boards were very pro-employer and this is payback, but I think this board is going far beyond what previous boards have done,” says Hal Coxson, a shareholder at Ogletree Deakins.

The president also appoints the NLRB general counsel, the agency’s chief prosecutor. The current acting general counsel, Lafe Solomon, has been unusually aggressive in seeking cases that will overturn Bush board precedent and in issuing memorandam to the regional offices seeking more aggressive action against companies accused of unfair labor practices. He also stirred a firestorm by filing a complaint asking that Boeing be forced to move production from a new plant in the right-to-work state of South Carolina to the state of Washington, where most of its workers are unionized.

Solomon and the current board took power about the same time that the unions’ key legislative priority—the Employee Free Choice Act (EFCA)—died in the Senate. Many believe the board is focused on achieving through case law and rulemaking what EFCA intended—a union representation election process that would help unions regain strength after years of decline.

“If you look at activity by the board, it’s all EFCA-driven,” says Ken Yerkes, a partner at Barnes & Thornburg. “There is a concerted effort by the agency to make these changes by hook or crook.”

Effectuating EFCA

The death of the EFCA in Congress did not drop a final curtain on the saga of whether the union representation election process should be changed. Instead, the action moved to new stages in state capitols and, most importantly, at the NLRB.

EFCA had riled business groups and political conservatives who focused their attack on one of its key provisions—replacing secret-ballot union representation elections with a process under which unions circulate cards for workers to sign. Employers believe the so-called card-check provision allows unions to unfairly pressure workers.

Card-check became a rallying cause for both business groups and political conservatives, who argued it was un-American to deny workers a secret ballot. Voters in four states—Arizona, South Carolina, South Dakota and Utah—ratified constitutional amendments guaranteeing workers the right to vote on union representation in secret. Alabama’s legislature approved a similar amendment in June that is scheduled for voter approval in November 2012.

Activity on the state level was spurred by signals from the NLRB that it would help unions increase their ratio of success in organizing campaigns, albeit without card-check. Those signals include memos from Solomon to the regional offices urging them to seek more court injunctions against employers during organizing campaigns, specifically in cases where the employer allegedly fired an employee to “nip [a union movement] in the bud.” He also advocated enhanced penalties for alleged unfair labor practices during both elections and first contract negotiations.

“Put those memos together and you see a clear effort to enhance remedies available [to unions] in the area where EFCA was focused,” Yerkes says. “It is not a stretch to say that the board is looking to implement EFCA through administrative action.”

In May, Solomon took the next step by filing suit against Arizona, contending that the state’s constitutional amendment is pre-empted by federal law. According to the complaint, the 1935 National Labor Relations Act (NLRA) gives workers two ways to choose a union: in a secret-ballot election or by persuading an employer to voluntarily recognize a union after showing majority support through signed authorization cards. Therefore the states can’t preclude the card-check option.

The pre-emption argument will be a “tough hurdle” for the states to overcome in court, says Michael Carrouth, a partner in Fisher & Phillips, although the states can argue they are protecting a community interest by requiring a secret ballot. He disputes the board’s decision to take action against the states, pointing out that in South Carolina, where he practices, 80 percent of the voters approved the amendment.

“The secret-ballot process is the most secure and accurate system for allowing employees to make informed and noncoerced decisions,” Carrouth says. “Anyone saying otherwise is either not telling the truth or has never actually seen what happens in a card-check campaign. If various states consider the right to make an independent and private decision on unionization a critical right for their citizens, the NLRB should respect this.”

Recently the labor board took another big step toward implementing procedures favorable to union organizing. It proposed rules to significantly shorten the time between the filing of a petition for a union election and the date the election is held. Employers say that would diminish their ability to communicate the benefits of remaining non-union. They also contend the current time frame is reasonable: In 2010, the median time between petition and election was 38 days.

In a dissent, Board Member Brian Hayes, the sole Republican member, said the proposed rules would shorten the time frame to between 10 days and 21 days. “Make no mistake, the principal purpose for this radical manipulation of our election process is to minimize, or rather to effectively eviscerate, an employer’s legitimate opportunity to express its views about collective bargaining,” he wrote.

While unions contend the change is needed to counter an unfair advantage employers enjoy, Yerkes disagrees.

“There is no factual basis to suggest this change is needed to level the playing field,” Yerkes says. “Unions already win 63.8 percent of all elections. Quite simply, this is an attempt to limit an employer’s ability to communicate its side of the story to its employees.”

After announcing the proposed changes on June 21, the board set a public hearing for July 18 and gave 60 days for submitting comments, signaling its intention to move with unusual haste.

“Based on how the NLRB has considered such significant changes in the past, it is moving very quickly on this, and is not allowing proper time to consider and evaluate the impact of these proposed changes,” Carrouth says. “In my opinion, they are acting in this manner because they know all the changes are aimed at assisting unions win elections, not ensuring the rights of employees are protected. Therefore, they do not want significant debate and review.”

Boeing Bombshell

Business fears about the impact of a union-oriented NLRB crystallized in April when Acting GC Lafe Solomon filed a complaint against Boeing for allegedly illegally retaliating against the Machinists and Aerospace Workers Union by opening a new facility in the right-to-work state of South Carolina.

Solomon alleged that Boeing illegally moved some production work for the 787 Dreamliner passenger plane from Washington state to South Carolina to punish union workers for past strikes. As a remedy, he asked that Boeing be required to move the work back to its unionized facilities in Washington, even though the company had already invested $2 billion and hired 1,000 workers in South Carolina.

In a strongly worded response to Solomon, Boeing General Counsel Michael Luttig asserted that the factory in South Carolina was built to handle new orders for the Dreamliner and that no work had been moved out of Washington. “As you well know, no work—none at all—was ‘removed’ or ‘transferred’ from Puget Sound,” Luttig wrote. Boeing contends that other economic advantages offered in South Carolina would have induced it to locate new production there, regardless of union considerations.

Luttig added that Solomon had mischaracterized statements by Boeing executives to make it appear the building of the new facility was retaliatory. “Through these misquotations and mischaracterizations, you have done a grave disservice to the Boeing Company, its executives and shareholders, and the 160,000 Boeing employees worldwide,” he wrote. “And, of course, you have filed a complaint based upon these misstatements that cannot credibly be maintained under law.”

However, the NLRB won round one of what is expected to be a protracted legal battle. On June 30, an administrative law judge in Seattle denied Boeing’s request to dismiss the lawsuit. The ruling allowed the NLRB to present its case in proceedings that were expected to last through the summer.

Mike Eastman, executive director of labor policy for the U.S. Chamber of Commerce, says the Boeing complaint has stirred up an unprecedented level of controversy because of the remedy it seeks—moving the work back to Washington after the company made a huge investment in the new plant.

“Boeing would not be a front-page story if the remedy requested was not as dramatic as it is,” Eastman says. “That’s what makes the case so breathtaking for employers. The reason it has received so much attention is that most people believe the decision on where to locate production is a basic business decision. The case is about whether government can second-guess that basic decision.”

The intense interest in that question generated action on Capitol Hill. Three GOP senators reportedly are preparing a bill to amend the National Labor Relations Act to clarify that the board cannot order an employer to relocate jobs from one location to another, and to guarantee an employer’s right to decide where to do business. And House Oversight and Government Reform Committee Chairman Darrell Issa, R-Calif., called a hearing in June to grill Solomon on the NLRB’s action, even as hearings on the lawsuit were getting underway.

Employment attorneys see broad implications if the NLRB ultimately prevails in the Boeing case because most companies factor in labor conditions—including wage rates and the likelihood of strikes as well as a skilled workforce—in making production location decisions.

And because the NLRB focused on comments from Boeing executives it characterized as anti-union in building its case, it also raises questions about whether employers are free to express their views on union issues.

“At some level people think employers should be able to talk about the costs of things like strike activity,” Eastman says. “Where is the line between free speech and retaliation?”

Yerkes says in-house counsel should advise their internal clients to be careful about public statements on whether unions factor into decision making.

“In the past, employers were free to think a union was not a good thing as long as they didn’t violate their employees’ Section 7 rights,” he says. “This changes the landscape in a dramatic way.”

Banners and Balloons

In addition to its landmark efforts to change union election law and limit an employer’s right to choose production locations, the NLRB has tackled several cases setting less critical but important precedents.

“There has been a whole series of decisions that will make major changes in labor policy,” Coxson says. “They come from a board we knew would be much tougher on employers than previous boards. But the business community did not anticipate it would be this extreme, and that is what has people concerned.”

Some decisions limit the historic protections under the NLRA-afforded employers hit with secondary boycotts. In a secondary boycott, a union takes issue with a “primary employer” that provides contractors at the worksite of a “secondary employer” with which the union does not have a dispute. Unions are barred from picketing the secondary employer’s worksite but have devised other ways to protest. One way is to place a banner near the worksite entrance saying “shame on” the neutral employer that hired the contractors.

In a series of decisions over the past year, the labor board found that unions can place a stationary banner in front of the secondary employer’s worksite, reasoning that bannering is not the same as picketing, and found no evidence the banners were a signal to employees to cease work. “The board said no one was marching with signs, so it was not prohibited by NLRA protections for secondary employers,” Coxson says.

In the February decision in Southwest Regional Council of Carpenters and Carpenters Local 184 and 1498 (New Star General Contractors, Inc.), in which the board approved stationary banners at a construction site, Republican Board Member Hayes dissented and accused his Democratic colleagues of “undoing through administrative adjudication the restrictions imposed by Congress on unions’ ability to involve neutral employers in a labor dispute.”

In late May, in Sheet Metal Workers Local # 15 (Brandon Regional Hospital), the board went a step further, ruling that a union had a right to display a giant, rat-shaped balloon outside a hospital where it was trying to pressure a hospital, with which it had no dispute, to stop doing business with nonunion contractors. The board majority found that the rat balloon was not likely to frighten those entering the hospital, disturb patients or their families or otherwise interfere with the hospital’s business. It concluded the rat balloon was symbolic speech and not a violation of the NLRA.

Hayes dissented again, contending that, “For pedestrians or occupants of cars passing in the shadow of a rat balloon, which proclaims the presence of a ‘rat employer’ and is surrounded by union agents, the message is unmistakably confrontational and coercive.”

Coxson says the case has implications for employers in a wide range of industries because unions often use huge inflatable rats to protest at construction sites, gas and electric companies, and other worksites.

“It really is a serious blow to the protections put into the [NLRA] in 1947 to protect employers who have no dispute with their employees,” he says.

The bannering and rat balloon cases are on the “top tier” of recent board decisions of interest to the U.S. Chamber of Commerce, according to Eastman. “This line of cases we view as making it easier for unions to engage in secondary activities, and that is a real concern for us,” he says.

Another case that stirred outrage in the employer community involved AT&T workers in Connecticut. Workers have a right to wear T-shirts, buttons and hats with a union insignia and message. But AT&T thought its customer service representatives who make repairs at customers’ homes went too far by wearing T-shirts labeled “inmate” with a picture of a jail cell, suggesting they were captives of the company.

The company said the T-shirts could frighten customers, especially because there had been a recent case where an escaped inmate murdered a mother and her children in their home.

“If you have someone come to the door with a T-shirt that says ‘inmate’ and you know there has been a home invasion by an inmate, are you going to let that person in?” asks Coxson. “Even if you figure out the person is from AT&T, what are you going to think of a company that allows employees to wear that type of thing?”

But the board ruled the T-shirts should be allowed under the NLRA’s protected concerted activity provision, rejecting arguments that this situation should be covered under the special circumstances exemption that allows employers to ban attire that interferes with the company’s business.

“If you can’t stop employees from wearing prison T-shirts, what can you do?” Eastman says.

Although The Southern New England Telephone Company d/b/a AT&T Connecticut is very fact-specific and thus less important than the bannering cases as a precedent, Coxson points out it is the type of decision generating widespread concern about the NLRB’s direction.

“These are the types of decisions that, to the average person, whether they support unions or not, appear to be outrageous,” Coxson says. “These are cases people can understand.”

Read about the NLRB’s social media cases in the October issue of InsideCounsel.